THE IMPACT OF SMALL AND MEDIUM SCALE ENTERPRISES ON ECONOMIC GROWTH IN NIGERIA 1982 – 2012

THE IMPACT OF SMALL AND MEDIUM SCALE ENTERPRISES ON ECONOMIC GROWTH IN NIGERIA 1982 – 2012

ABSTRACT

The purpose of this study is to investigate the impact of small and medium-sized firms on Nigerian economic growth. The primary goal of this research is to conduct an empirical investigation on the impact of small and medium-sized firms on Nigerian economic growth. This research used secondary data from the Central Bank of Nigeria’s Statistical Bulletin (2012). The data were collected during a thirty-one-year period (from 1982 to 2012). The data was analysed using the Ordinary Least Squares Regression Technique. It was discovered, among other things: Based on the empirical evidence, it is established that small and medium-sized firms have a substantial impact on Nigerian economic growth. SME development crosses across sectors, includes various stakeholders, and requires joint action by the public and commercial sectors; thus, it should be integrated into the national development framework. Building market institutions should be accompanied by capacity building for appropriate institutional structures. It is recommended that the federal government implement favourable fiscal and monetary policies to encourage foreign investors to invest in the economy. Additionally, the government should ensure that productivity in the domestic sector of the economy is increased, as this will encourage infant industries to produce capital goods for export.

Chapter one

INTRODUCTION

Small and medium-sized enterprises (SMEs) play a critical role in the national economy. These firms have received more governmental attention in recent years, particularly in third-world nations, owing to rising dissatisfaction with the outcomes of development plans focussing on large-scale capital-intensive and heavily import-dependent industrial units.

SMEs have an impact in the following ways: increased utilisation of local raw materials, job creation, encouragement of rural development, development of entrepreneurship, mobilisation of local savings, linkages with larger industries, provision of regional balance by spreading investments more evenly, provision of avenues for self-employment, and provision of opportunities for training managers and semi-skilled workers.

The vast majority of developed and developing countries rely on the dynamism, resourcefulness, and risk-taking of small and medium-sized businesses to initiate and sustain the process of economic growth. Small and medium-sized businesses play a very significant part in overall economic development.

Small and medium-sized firms promote endurance competition and entrepreneurship, which have external benefits for economic and productivity growth. At this level, the focus is on government support and involvement in leveraging countries’ social gains from increased completion and entrepreneurship.